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THIS WEEK'S ARTICLES
ConAgra Unit to Plead Guilty, Pay $11.2 Million Fine Related to Salmonella Outbreak
New Computer Bug Exposes Broad Security Flaws
Can You Sue the Boss for Making You Answer Late-Night Email?
Global Banks to Pay $5.6 Billion in Penalties in FX, Libor Probes

ConAgra Unit to Plead Guilty, Pay $11.2 Million Fine Related to Salmonella Outbreak
by: Jesse Newman
May 20, 2015
Click here to view the full article on WSJ.com

TOPICS: ConAgra, Business Ethics, Recalls, Safety, Safety Violations

SUMMARY: A unit of ConAgra Foods Inc. agreed to pay a record fine and plead guilty to a federal misdemeanor charge stemming from a 2006-07 salmonella outbreak, a rare criminal case against a major U.S. food company that highlights intensified enforcement of food-safety laws by the Justice Department. ConAgra Grocery Products LLC on Wednesday agreed to pay $11.2 million to settle allegations the company shipped contaminated peanut butter that resulted in a nationwide outbreak, sickening more than 700 people. The criminal fine is the largest ever paid in a U.S. food-safety case, the Justice Department said. "The proposed criminal fine and sentence in this case should sound the alarm to food companies across the country," said Michael Moore, the U.S. attorney for the Middle District of Georgia. ConAgra in 2007 recalled its Peter Pan and Great Value peanut-butter brands after a salmonella outbreak that sickened people in 47 states was traced to the company's Sylvester, Ga., plant. The government alleged that ConAgra in December 2006 shipped tainted peanut butter from Georgia to Texas, after it was produced under conditions in which it may have become contaminated with salmonella. Samples obtained following the recall showed peanut butter made at the Georgia plant on nine different dates between Aug. 4, 2006, and Jan. 29, 2007, was contaminated with salmonella, and plant-wide testing identified the same strain in at least nine locations there, according to prosecutors. The Justice Department said ConAgra employees pinpointed several possible factors contributing to salmonella contamination, including an old peanut roaster that wasn't uniformly heating raw nuts, a storm-damaged sugar silo and a leaky roof that allowed moisture to build in the plant, but the company didn't fully address these problems until after the outbreak.

CLASSROOM APPLICATION: The Justice Department is sending a message that it will strictly enforce penalties against companies found guilty of food safety violations with the $11.2 million fine against a unit of ConAgra Foods. This is the largest criminal fine every paid involving a U.S. food-safety case. The case involves peanut butter contaminated with salmonella that came from a Georgia plant and was later recalled by the company. According to allegations, the ConAgra factory knew or should have known about the problems before the recall. Investigations showed that problems at the factory included a leaky roof, faulty equipment, and employees who did not know how to interpret test results for salmonella. The Justice Department wants food manufacturers to know they will be held liable if they neglect their responsibilities to develop safe food products.

QUESTIONS: 
1. (Introductory) Do you believe the fine levied against ConAgra is appropriate considering the multiple problems that occurred at the factory in question?

2. (Advanced) What controls should ConAgra adopt to make certain all factories are in compliance with food safety rules?

3. (Advanced) If a food manufacturer takes all of the appropriate steps in maintaining food safety, and people still get sick from bacterial contamination from their products, should the company then be held liable?

Reviewed By: OC Ferrell, University of New Mexico


New Computer Bug Exposes Broad Security Flaws
by: Jennifer Valentino-DeVries
May 19, 2015
Click here to view the full article on WSJ.com

TOPICS: Business Ethics, hackers, Internet

SUMMARY: A dilemma this spring for engineers at big tech companies, including Google Inc., Apple Inc. and Microsoft Corp. , shows the difficulty of protecting Internet users from hackers. Internet-security experts crafted a fix for a previously undisclosed bug in security tools used by all modern Web browsers. But deploying the fix could break the Internet for thousands of websites. "It's a twitchy business, and we try to be careful," said Richard Barnes, who worked on the problem as the security lead for Mozilla Corp., maker of the Firefox Web browser. "The question is: How do you come up with a solution that gets as much security as you can without causing a lot of disruption to the Internet?" Engineers at browser makers traded messages for two months, ultimately choosing a fix that could make more than 20,000 websites unreachable. All of the browser makers have released updates including the fix or will soon, company representatives said. The story of the new bug began several years ago, when researchers at French computer-science lab Inria began looking for flaws in the way different programs use communications protocols, or computer handshakes, that underlie the Internet. Last year, they began probing software that used TLS, or "transport layer security," which creates secure connections for things like electronic payments and sensitive data. Browser makers could remedy the problem by changing their browsers to reject small keys. But that would disable thousands of legitimate Web servers. Ultimately, browser makers decided to move toward rejecting keys with fewer than 1,024 bits, or 309 digits. That could leave about 0.2% of secure websites inaccessible.

CLASSROOM APPLICATION: The openness and decentralization that has made the Internet so beneficial also has its downside. The more decentralized the Internet, the harder it is to secure. Hackers are constantly finding new ways to break into sites and steal sensitive consumer or government information. It is also hard for websites to keep up with new security controls for new viruses, and many remain vulnerable. A new bug called LogJam was developed that had the ability to target all Web browsers. Browser makers took steps to solve this problem by rejecting small keys. The problem is that 0.2 percent of legitimate websites might be rendered inaccessible because of these changes. Big tech companies are having to balance website accessibility with security.

QUESTIONS: 
1. (Introductory) If big tech companies can stop a major virus, does this justify adopting controls that could make some legitimate websites inaccessible?

2. (Advanced) Why might these security changes place smaller companies at a disadvantage?

3. (Advanced) Why is it sometimes difficult for major websites to eliminate vulnerabilities even after they are alerted to new dangers?

Reviewed By: OC Ferrell, University of New Mexico


Can You Sue the Boss for Making You Answer Late-Night Email?
by: Lauren Weber
May 20, 2015
Click here to view the full article on WSJ.com

TOPICS: Business Ethics, Compensation, employees, employer, Labor dispute, Law Suits

SUMMARY: Company-issued smartphones have obliterated the line between the workday and off hours. For employers and workers, 8 p.m. emails from the boss aren't just disrupting home life-they're raising legal questions, too. Several lawsuits have alleged that companies are expecting employees to work unpaid and off-hours via iPhones, BlackBerrys or other digital devices. The number of suits, not to mention legal opinions, is relatively small so far, but attorneys say a newly sympathetic attitude among judges, along with coming changes to federal labor regulations, could open the door to many more claims. About 44% of Internet users regularly did some job tasks outside the workplace last year, often on technologies like smartphones, according to the Pew Research Center. While almost half of workers surveyed said digital technology helped them do their jobs better, 35% said it increased the number of hours they work. New rules coming from the Department of Labor as early as this summer are expected to increase the salary floor and sweep millions more Americans into the purview of the Fair Labor Standards Act, which protects workers' right to overtime pay. Earlier this month, the agency submitted its proposal to the Office of Management and Budget, which will review it and then release it for public comment. Once new rules are issued, workers may bring more suits like one filed in 2009 by salespeople at T-Mobile USA Inc. stores, who said they were given BlackBerrys and other devices and expected to work 10 to 15 hours a week off the clock, answering emails and text messages from customers and other staffers. They alleged that T-Mobile required them to hand out business cards with their mobile numbers, so that customers could contact them at all times. In 2010, T-Mobile paid an undisclosed amount to settle the suit. Employers should prohibit off-the-clock work and take measures to enforce those rules, or stop issuing workers smartphones and remote computer access, said Dan Getman, the attorney who represented the T-Mobile workers.

CLASSROOM APPLICATION: According to the law, employees earning more than $455 a week may not be eligible for overtime pay. Traditionally, this means that if an employee puts in extra work hours, he or she does not necessarily have to be compensated for those hours if they hit a certain pay threshold. However, forcing employees to work "off-the-clock" in their downtime, such as during evenings, weekends, and holidays, is causing a legal stir. Because smartphones make it easy to blur the line between work and off hours, some employers expect employees to answer emails or take phone calls off-the-clock without compensation. About 44 percent of Internet users claim they regularly do some job tasks outside the work environment. Employees have filed lawsuits against their employers as they do not believe they should be on call 24/7. Judges appear to be more sympathetic to employees regarding this issue, which has legal implications as the Department of Labor is expected to introduce new rules this summer.

QUESTIONS: 
1. (Introductory) Should employees be asked to work off-the-clock if they are salaried employees (meaning they do not usually receive overtime)?

2. (Advanced) If an employee has a demanding job and is compensated well for it, does this change the situation regarding having him or her work during off-hours for no additional compensation?

3. (Advanced) Volkswagen has a policy in which corporate does not send emails between 6:15 p.m. and 7 a.m. Should U.S. companies take Volkswagen's lead on this issue?

Reviewed By: OC Ferrell, University of New Mexico


Global Banks to Pay $5.6 Billion in Penalties in FX, Libor Probes
by: Aruna Viswanatha
May 20, 2015
Click here to view the full article on WSJ.com

TOPICS: Antitrust Law, Banking Industry, Business Ethics, LIBOR

SUMMARY: Five global banks agreed to pay more than $5 billion in combined penalties and will plead guilty to criminal charges to resolve a long-running U.S. investigation into whether traders colluded to move foreign-currency rates for their own financial benefit. Four of the banks, J.P. Morgan Chase & Co., Barclays PLC, Royal Bank of Scotland Group PLC and Citigroup Inc., will plead guilty to conspiring to manipulate prices in the $500 billion-a-day market for U.S. dollars and euros, authorities said. The size and scope of the resolutions reflect authorities' attempts to crack down on what they called "breathtaking" misconduct, with some of the largest fines levied to date by the Justice Department for antitrust violations. Prosecutors also took the unusual step of ripping up a prior agreement over subsequent violations and extracted the first criminal guilty pleas from big U.S. banks in decades. Some banks blamed the conduct on a small group of traders and suggested the problems weren't systemic throughout the firm. "The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us, and have significant ramifications for the entire firm," said J.P. Morgan Chief Executive James Dimon, who added the bank is working to fortify its controls. Justice Department officials said several traders at each bank were responsible for the misconduct. Officials said a 19-month investigation showed traders withholding bids or offers to avoid moving the rate in directions that would hurt open positions held by other members of the group, in violation of antitrust laws. Members of the group discussed whether to allow one Barclays trader to join the chat room and ultimately decided to let him in for a "1 month trial," but advised him: "mess this up and sleep with one eye open at night," according to the New York State Department of Financial Services. The five banks will be under a three-year period of probation, overseen by federal judges. The plea agreements will require the banks to implement compliance programs to prevent and detect attempts to manipulate rates and provide an annual report on that progress to the government. Under agreements with regulators, the banks are already obligated to more broadly improve compliance and controls.

CLASSROOM APPLICATION: For the first time in decades, prosecutors have extracted guilty pleas from big U.S. banks. This is in regards to major misconduct in which the banks colluded with each other to manipulate the London interbank offered rate, or LIBOR. This rate affects the $500-billion-dollar-a-day market for U.S. dollars and euros. Traders at the banks used codes to try to move the rate so to favor their positions, which violates antitrust laws. According to the banks, the misconduct was not systemic throughout their organizations but was the result of small groups of employees. This misconduct has resulted in a staggering $5.6 billion in penalties.

QUESTIONS: 
1. (Introductory) Is the $5.6 billion in penalties appropriate considering the banks' misconduct, or do you think the penalty is too excessive?

2. (Advanced) Do you believe it is likely that the misconduct resulted from small groups of employees with top management knowing nothing about it?

3. (Advanced) According to an email, one trader was advised: "mess this up and sleep with one eye open at night." What does this threat show about the seriousness of the misconduct?

Reviewed By: OC Ferrell, University of New Mexico


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